Capitalism, Macroeconomics and Reality
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Capitalism, Macroeconomics and Reality

Understanding Globalization, Financialization, Competition and Crisis

James Crotty

The essays comprising this collection analyze the deep flaws in the methodological foundation of mainstream economic theory, and explain how these flaws make mainstream economics more ideology than sound social science. James Crotty develops alternative theories built on realistic assumptions that can explain most of the disastrous economic and financial developments of the past four decades. His work contributes to the collective creation of a solid theoretical foundation on which to build an understanding of the ‘laws of motion’ of capitalism in the post WWII era.
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Chapter 2: Are Keynesian Uncertainty and Macrotheory Compatible? Conventional Decision Making, Institutional Structures and Conditional Stability in Keynesian Macromodels

James Crotty

Extract

The theory of capital investment is the cornerstone of the theory of macroeconomic dynamics, and the question of whether or not the agents involved in the investment decision have the information needed to make individually and collectively optimal choices is central to capital accumulation theory. New Classical and neoclassical theory assume that they do. Keynesian and Post Keynesian theory assume that they do not. The outcome of many significant debates in macrotheory depends on which theory is correct about this.

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